Dividends are a great way to reward shareholders. Dividends normally provide more reliable returns than the share price.
The long-term average return of shares is around 10%, if an investor can find a high-yielding share that slowly grows, that's a potential way of beating the market.
Here are four shares with high yields:
G8 Education Ltd (ASX: GEM)
G8 is one of the largest childcare providers in Australia. It currently has around 510 centres and continues to slowly acquire more.
Childcare is a fairly consistent industry year to year and G8 has been very consistent with its dividend. It has paid the same 6 cents per share every quarter since December 2014.
It's currently trading at 13x FY17's estimated earnings with a grossed-up dividend yield of 9.45%.
Mystate Limited (ASX: MYS)
Mystate is a diversified financial group that is headquartered in Tasmania. Most financial institutions in Australia have benefited significantly from the residential property market.
Like its peers, Mystate is very profitable and pays out a large fully franked dividend. It's currently trading at 13x FY17's estimated earnings with a grossed-up dividend yield of 8.95%.
Mortgage Choice Limited (ASX: MOC)
Mortgage Choice is one of Australia's largest loan brokers. It is another beneficiary of Australia's property market with a growing level of trailing commission from the loans it brokers.
Mortgage Choice currently has a huge grossed-up dividend yield of 11.56%. It's trading at 13x FY16's earnings.
WAM Research Limited (ASX: WAX)
WAM Research is a listed investment company run by Geoff Wilson and his high-performing Wilson Asset Management team.
It focuses on smaller, growing businesses that should beat the average market return. It pays out most of the profit it makes as a dividend.
It's currently trading with a grossed-up dividend yield of 8.5%.
Foolish takeaway
Focusing on shares with high yields can be a risky strategy if you aren't careful about the shares you choose.
Out of the above four options, WAM Research is definitely my favourite. Financial shares can be very cyclical and G8 currently has a high level of debt on its balance sheet.
